Del Taco Restaurants (NASDAQ: TACO) and Chipotle Mexican Grill (NYSE:CMG) are both retail/wholesale companies, but which is the superior business? We will contrast the two businesses based on the strength of their profitability, risk, earnings, dividends, valuation, analyst recommendations and institutional ownership.
Valuation and Earnings
This table compares Del Taco Restaurants and Chipotle Mexican Grill’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Del Taco Restaurants||$468.58 million||1.28||$67.62 million||$0.56||27.59|
|Chipotle Mexican Grill||$4.31 billion||2.03||$397.78 million||$4.74||64.73|
Chipotle Mexican Grill has higher revenue and earnings than Del Taco Restaurants. Del Taco Restaurants is trading at a lower price-to-earnings ratio than Chipotle Mexican Grill, indicating that it is currently the more affordable of the two stocks.
Insider & Institutional Ownership
69.9% of Del Taco Restaurants shares are owned by institutional investors. Comparatively, 90.1% of Chipotle Mexican Grill shares are owned by institutional investors. 14.6% of Del Taco Restaurants shares are owned by company insiders. Comparatively, 2.0% of Chipotle Mexican Grill shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.
This table compares Del Taco Restaurants and Chipotle Mexican Grill’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Del Taco Restaurants||4.81%||5.90%||3.08%|
|Chipotle Mexican Grill||3.17%||10.65%||7.38%|
This is a summary of recent recommendations and price targets for Del Taco Restaurants and Chipotle Mexican Grill, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Del Taco Restaurants||0||1||4||0||2.80|
|Chipotle Mexican Grill||4||22||9||0||2.14|
Del Taco Restaurants presently has a consensus target price of $16.80, suggesting a potential upside of 8.74%. Chipotle Mexican Grill has a consensus target price of $391.44, suggesting a potential upside of 27.58%. Given Chipotle Mexican Grill’s higher possible upside, analysts clearly believe Chipotle Mexican Grill is more favorable than Del Taco Restaurants.
Volatility & Risk
Del Taco Restaurants has a beta of -0.2, suggesting that its stock price is 120% less volatile than the S&P 500. Comparatively, Chipotle Mexican Grill has a beta of 0.6, suggesting that its stock price is 40% less volatile than the S&P 500.
Chipotle Mexican Grill beats Del Taco Restaurants on 11 of the 14 factors compared between the two stocks.
Del Taco Restaurants Company Profile
Del Taco Restaurants, Inc. is an operator and franchisor of restaurants featuring made-to-order cuisine, including both Mexican inspired and American classic dishes. As of January 3, 2017, the Company operated 551 Del Taco restaurants. The Company’s menu offers a combination of Mexican-inspired food, such as tacos and burritos, and American classics, such as Double Del cheeseburgers, crinkle-cut fries and milkshakes. The Company’s menu features items, such as its Platos plated meals, Epic Burritos, Handcrafted Ensaladas and Fresca Bowls, as well as items on its Buck & Under Menu. As of January 3, 2017, the Company had 310 Company-operated and 241 franchise-operated restaurants. The Platos menu offering consists of individually plated meals complete with an entree, two sides, and chips and salsa. The Company’s menu also includes quesadillas, bowls and handcrafted ensaladas, as well as burgers and fries.
Chipotle Mexican Grill Company Profile
Chipotle Mexican Grill, Inc. (Chipotle), together with its subsidiaries, operates Chipotle Mexican Grill restaurants. The Company’s Chipotle Mexican Grill restaurants serve a menu of burritos, tacos, burrito bowls (a burrito without the tortilla) and salads. As of December 31, 2016, the Company managed its operations and restaurants based on 11 regions. As of December 31, 2016, the Company operated 2,198 Chipotle restaurants throughout the United States, as well as 29 international Chipotle restaurants, and it also had 23 restaurants in operation in other non-Chipotle concepts. As of December 31, 2016, 29 of its restaurants were located outside of the United States, with 17 in Canada, six in the United Kingdom, five in France and one in Frankfurt, Germany. The Company sells gift cards, which do not have an expiration date. The Company categorizes its restaurants as end-caps (at the end of a line of retail outlets), in-lines (in a line of retail outlets), free-standing or other.
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